Concordia Parish School Board v. Louisiana MacHinery Rentals, LLC

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT

12-422

CONCORDIA PARISH SCHOOL BOARD
CONCORDIA PARISH HOSPITAL DISTRICT #1
CONCORDIA PARISH POLICE JURY
CITY OF VIDALIA
TOWN OF FERRIDAY

VERSUS

LOUISIANA MACHINERY RENTALS, LLC

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APPEAL FROM THE
SEVENTH JUDICIAL DISTRICT COURT
PARISH OF CONCORDIA, NO. 45,820 “A”
HONORABLE KATHY JOHNSON, DISTRICT JUDGE
**********
JAMES T. GENOVESE
JUDGE

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Court composed of John D. Saunders, Elizabeth A. Pickett, and James T.
Genovese, Judges.

REVERSED AND REMANDED.

Jesse R. Adams, III
Kathryn S. Friel
Andre Brian Burvant
Matthew A. Mantle
Jones, Walker, Waechter, Poitevent, Carrère & Denègre, L.L.P.
201 St. Charles Ave., 51st Floor
New Orleans, Louisiana 70170-5100
(504) 582-8000
COUNSEL FOR DEFENDANT/APPELLANT:
Louisiana Machinery Rentals, LLC

Jack Hendrix McLemore, Jr.
Post Office Box 520
200 Advocate Row, Suite B
Vidalia, Louisiana 71373
(318) 336-9189
COUNSEL FOR PLAINTIFFS/APPELLEES:
Concordia Parish School Board,
Concordia Parish Hospital District #1,
Concordia Parish Police Jury,
City of Vidalia, and
Town of Ferriday

Robert R. Rainer
Drew M. Talbot
Rainer, Anding & McLindon
8480 Bluebonnet Blvd., Suite D
Baton Rouge, Louisiana 70810
(225) 766-0200
COUNSEL FOR PLAINTIFFS/APPELLEES:
Concordia Parish School Board,
Concordia Parish Hospital District #1,
Concordia Parish Police Jury,
City of Vidalia, and
Town of Ferriday

GENOVESE, Judge.

In this sales and use tax case, Defendant, Louisiana Machinery Rentals, LLC

(LMR), appeals the grant of a partial summary judgment enforcing the assessment

of the taxing authorities, Plaintiffs, Concordia Parish School Board, Concordia

Parish Hospital District #1, Concordia Parish Police Jury, City of Vidalia, and

Town of Ferriday.1 Plaintiffs have answered the appeal seeking sanctions against

LMR for filing a frivolous appeal. For the reasons that follow, we reverse the trial

court’s grant of the partial summary judgment; we deny the claim for damages for

frivolous appeal; and, we remand the matter to the trial court for further

proceedings.

FACTS AND PROCEDURAL HISTORY

LMR, an entity forming part of Louisiana’s exclusive Caterpillar franchise

dealers, sold, leased, and repaired Caterpillar equipment and machinery in

Concordia Parish. The Concordia Parish School Board, Concordia Parish Hospital

District #1, Concordia Parish Police Jury, City of Vidalia, and Town of Ferriday

designated the Concordia Parish School Board (the Collector) as their sales and use

tax collector.

The Collector commissioned a private auditing firm to perform an audit of

LMR which revealed deficiencies for the period December 1, 2000, through June

30, 2007. The Collector, thereafter, initiated the collection process on November

24, 2009, by sending LMR a Notice of Intent to Assess additional taxes, penalties,

and interest in accordance with La.R.S. 47:337.48.2 LMR neither protested the

Notice of Intent to Assess, nor did it request a hearing.

1
The instant proceeding is one of several cases in various jurisdictions and in different stages of
litigation that result from virtually identical facts and issues of law.
2
Louisiana Revised Statutes 47:337.48 provides as follows:

The Collector then issued a formal Notice of Assessment (also referred to as

the Original Assessment) to LMR on December 24, 2009, allegedly in accordance

with La.R.S. 47:337.51 in effect in 2009 before the 2010 amendment to

subsections A and B.3 Upon receipt of this notice, LMR did not pay the

A. If a taxpayer fails to make and file any return or report required by the
provisions of the local ordinance and this Chapter, the collector shall determine
the tax, penalty, and interest due by estimate or otherwise. Having determined the
amount of tax, penalty, and interest due, the collector shall send by mail a notice
to the taxpayer at the address given in the last report filed by him pursuant to the
provisions of this Chapter, or to any address that may be obtainable from any
private entity which will provide such address free of charge or from any federal,
state, or local government entity, including but not limited to the U.S. Postal
Service or from U.S. Postal Service certified software, setting out his
determination and informing the person of his purpose to assess the amount so
determined against him after fifteen calendar days from the date of the notice.

B. If a return or report made and filed does not correctly compute the
liability of the taxpayer, the collector shall cause an audit, investigation, or
examination, as provided for by R.S. 47:337.35, to be made to determine the tax,
penalty, and interest due. Having determined the amount of tax, penalty, and
interest due, the collector shall send by mail a notice to the taxpayer at the address
given in the last report filed by him pursuant to the provisions of this Chapter, or
to any address that may be obtainable from the U.S. Postal Service or from U.S.
Postal Service certified software, setting out his determination and informing the
person of his purpose to assess the amount so determined against him after thirty
calendar days from the date of the notice.
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Louisiana Revised Statutes 47:337.51 provided as follows:

A. Having assessed the amount determined to be due, the collector shall
send a notice by certified mail to the taxpayer against whom the assessment is
imposed at the address given in the last report filed by said taxpayer, or to any
address obtainable from any private entity which will provide such address free of
charge or from any federal, state, or local government entity, including but not
limited to the United States Postal Service or from the United States Postal
Service certified software. If no report has been timely filed, the collector shall
send a notice by certified mail to the taxpayer against whom the assessment is
imposed at any address obtainable from any private entity which will provide
such address free of charge or from any federal, state, or local government entity,
including but not limited to the United States Postal Service or from the United
States Postal Service certified software. This notice shall inform the taxpayer of
the assessment and that he has sixty calendar days from the date of the notice to
(a) pay the amount of the assessment; (b) request a hearing with the collector; or
(c) pay under protest in accordance with R.S. 47:337.63.

B. If any dealer shall be aggrieved by any findings or assessment of the
collector, he may, within thirty days of the receipt of notice of the assessment or
finding, file a protest with the collector in writing, signed by himself or his duly
authorized agent, which shall be under oath and shall set forth the reason therefor,
and may request a hearing. Thereafter, the collector shall grant a hearing to said
dealer, if a hearing has been requested, and may make any order confirming,
modifying or vacating any such finding or assessment. The filing of any such
protest shall not abate any penalty for nonpayment, nor shall it stay the right of
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assessment, respond in protest, or request a hearing. Instead, LMR provided

additional tax records to the auditors that they had previously withheld.

The Collector reviewed the additional audit documentation and subsequently

affirmed its findings. On February 22, 2010, the Collector reissued a second

formal Notice of Assessment-Extension (sometimes referred to as the First Revised

Assessment) to LMR in accordance with La.R.S. 47:337.51. The First Revised

Assessment extended additional time to LMR to raise either factual or legal

objections. It did not do so.

After receiving the First Revised Assessment, LMR again submitted

additional records to the auditors. After the auditors reviewed this newly supplied

information, the assessment was substantially reduced. The Collector then issued a

third formal Notice of Assessment-Extension (sometimes referred to as the Second

Revised Assessment) to LMR on April 26, 2010. LMR did not respond to the

the taxing authority to collect the tax in any manner herein provided. Appeals
from the decision of the collector shall be directed to any state, city or federal
court of competent jurisdiction. This Section shall afford a legal remedy and right
of action in any state, city or federal court having jurisdiction of the parties and
subject matter for a full and complete adjudication of any and all questions arising
in the enforcement of the local ordinance and this Chapter as to the legality of any
tax accrued or accruing or the method of enforcement thereof.

C. (1) No assessment made by the collector shall be final if it is
determined that the assessment was based on an error of fact or of law. An “error
of fact” for this purpose means facts material to the assessment assumed by the
collector at the time of the assessment to be true but which subsequently are
determined by the collector to be false. “Error of law” for this purpose means that
in making the assessment the collector applied the law contrary to the
construction followed by the collector in making other assessments.

(2) The determination of an error of fact or of law under this Subsection
shall be solely that of the collector, and no action against the collector with
respect to the determination shall be brought in any court, and no court shall have
jurisdiction of any such action, it being the intent of this Subsection only to permit
the collector to correct manifest errors of fact or in the application of the law
made by the collector in making the assessment; however, all reductions of
assessments based on such errors, except estimated assessments made due to the
failure of the taxpayer to file a proper tax return, must be approved and signed by
the collector. Estimated assessments made due to the failure of the taxpayer to
file a proper tax return may be corrected by the acceptance of the proper tax
return and must be approved by the collector or his designee.

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Second Revised Assessment. Consequently, on September 24, 2010, the Collector

instituted the present proceeding by filing a Rule for Payment of Sales Tax against

LMR for payment of taxes, penalties, interest, and attorney fees pursuant to

La.R.S. 47:337.61.4

4
Louisiana Revised Statutes 47:337.61 provides as follows:

In addition to any other procedure provided in this Chapter or elsewhere in
the laws of this state, and for the purpose of facilitating and expediting the
determination and trial of all claims for taxes, penalties, interest, attorney fees, or
other costs and charges arising, there is hereby provided a summary proceeding
for the hearing and determination of all claims by or on behalf of the taxing
authority, or by or on behalf of the collector, for taxes and for the penalties,
interest, attorney fees, costs or other charges due thereon, by preference in all
courts, all as follows:

(1) All such proceedings, whether original or by intervention or third
opposition or otherwise, brought by or on behalf of the taxing authority, or by or
on behalf of the collector, for the determination or collection of any tax, interest,
penalty, attorney fees, costs or other charge claimed to be due shall be summary
and shall always be tried or heard by preference, in all courts, original and
appellate, whether in or out of term time, and either in open court or chambers, at
such time as may be fixed by the court, which shall be not less than two nor more
than ten days after notice to the defendant or opposing party.

(2) All defenses, whether by exception or to the merits, made or intended
to be made to any such claim, must be presented at one time and filed in the court
of original jurisdiction prior to the time fixed for the hearing, and no court shall
consider any defense unless so presented and filed. This provision shall be
construed to deny to any court the right to extend the time for pleading defenses,
and no continuance shall be granted by any court to any defendant except for legal
grounds set forth in the Louisiana Code of Civil Procedure.

(3) That all matters involving any such claim shall be decided within
forty-eight hours after submission, whether in term time or in vacation, and
whether in the court of first instance or in an appellate court, and all judgments
sustaining any such claim shall be rendered and signed the same day, and shall
become final and executory on the fifth calendar day after rendition. No new
trial, rehearing or devolutive appeal shall be allowed. Suspensive appeals may be
granted, but must be perfected within five calendar days from the rendition of the
judgment by giving of bond, with good and solvent security, in a sum double that
of the total amount of the judgment, including costs. Such appeals, whether to a
court of appeal or to the supreme court, shall be made returnable in not more than
fifteen calendar days from the rendition of the judgment.

(4) Whenever the pleadings filed on behalf of the taxing authority, or on
behalf of the collector, shall be accompanied by an affidavit of the collector or of
one of his assistants or representatives or of the counsel or attorney filing the
same, that the facts as alleged are true to the best of the affiant's knowledge or
belief, all of the facts alleged in said pleadings shall be accepted as prima facie
true and as constituting a prima facie case, and the burden of proof to establish
anything to the contrary shall rest wholly on the defendant or opposing party.

4

LMR responded by filing exceptions, affirmative defenses, and an answer.

Thereafter, and with leave of court, the Collector filed a Supplemental and

Amending Petition for Rule to Show Cause in Summary Sales and Use Tax

Proceeding. In addition, the Collector filed an exception of lack of subject matter

jurisdiction and an exception of preemption in response to LMR’s exceptions,

affirmative defenses, and answer. The Collector also filed a motion for partial

summary judgment. Responding to the supplemental petition, LMR again raised

exceptions, affirmative defenses, and filed an answer thereto.

On January 5, 2012, the trial court held a hearing only on the motion for

partial summary judgment. Based upon its determination that the April 26, 2010

Second Revised Assessment was final, the trial court granted partial summary

judgment against LMR in favor of the Collector. LMR appealed, and the Collector

answered the appeal, seeking sanctions for frivolous appeal.

ASSIGNMENTS OF ERROR

On appeal, LMR assigns four errors by the trial court. It first asserts that the

trial court erred in failing to find that the Notice of Assessment-Extension did not

comply with La.R.S. 47:337.51(A), thereby making said notice invalid and void.

LMR next asserts that the trial court erred in concluding that the requirements of

La.R.S. 47:337.51(A) need not be specifically enumerated in this case since the

taxpayer was a large company. LMR further asserts that the trial court erred in

failing to find that the claim for taxes had prescribed prior to the issuance of the

Notice of Assessment-Extension. Finally, it contends that the trial court erred in

granting the motion for partial summary judgment because the affidavit filed in

support thereof was not based on personal knowledge and that genuine issues of

material fact as to the amount of taxes owed by LMR remain in dispute.

5

LAW AND DISCUSSION

The facts, issues, assignments of error, and briefs are identical to those set

forth in Catahoula Parish School Board v. Louisiana Machinery Rentals, LLC,

12-443, 12-444 (La.App. 3 Cir. X/X/XX), ---So.3d ---. For the reasons this day

assigned in Catahoula, this matter is reversed and remanded to the trial court for

further proceedings. Additionally, for the reasons assigned therein, we have found

LMR’s appeal to be meritorious; therefore, the appeal is not frivolous. Thus, we

deny the Collector’s request for sanctions for frivolous appeal.

DECREE

The trial court’s grant of the partial summary judgment in favor of the

Plaintiffs, Concordia Parish School Board, Concordia Parish Hospital District #1,

Concordia Parish Police Jury, City of Vidalia, and the Town of Ferriday, against

Defendant, Louisiana Machinery Rentals, LLC, is reversed. This matter is

remanded to the trial court for further proceedings consistent herewith.

Additionally, Louisiana Machinery Rentals, LLC’s request for damages and

attorney fees for frivolous appeal is denied. Costs of this appeal are assessed to

Concordia Parish School Board, Concordia Parish Hospital District #1, Concordia

Parish Police Jury, City of Vidalia, and the Town of Ferriday in the amount of

$2,223.50 pursuant to La.R.S. 13:5112.

REVERSED AND REMANDED.

6